American shipping and logistics giant United Parcel Service (NYSE:UPS) has agreed to buy software and reverse logistics company Happy Returns for an undisclosed sum. Happy Returns is currently owned by financial technology firm PayPal (NASDAQ:PYPL). The deal will effectuate frictionless, no-box, no-label returns for thousands of merchants and customers across the U.S. The acquisition is expected to close in the fourth quarter of 2023, subject to regulatory approvals.
Happy Returns will be combined with UPS’ small package network, which boasts 5,200 stores. Meanwhile, Happy Returns has over 800 merchant customers. The combined entity will serve more than 12,000 locations and drop-off points in the U.S. Happy Returns’ CEO and co-founder David Sobie will continue to lead the returns business for UPS upon the closure of the deal.
The reverse logistics market has witnessed a boom since the pandemic boosted online purchases. Returned goods are moved back to the merchants through a complicated supply chain network that often involves higher costs. Merging UPS’ already well-established logistics network with Happy Returns’ software and technology will result in cost-effective returns for both merchants and customers. The timing of UPS’ acquisition is crucial since merchants witness maximum returns during the Christmas holiday season, with the process of returns running well into January.
Is UPS a Good Stock to Buy Now?
UPS is set to release its Q3FY23 results today before the market opens. The Street expects UPS to post diluted earnings of $1.52 per share on revenues of $21.40 billion.
Ahead of its Q3 print, Wall Street has a Moderate Buy consensus rating on UPS. This is based on eight Buys, 12 Holds, and one Sell rating on TipRanks. Also, the average United Parcel Service price forecast of $180.71 implies a nearly 23% upside potential from current levels. Year-to-date, UPS stock has lost 13.8%.
